A really good book covering the state of money power and politics in India over the last decade. The title is a misnomer as the book looks way beyond just the growth and dominance of Billionaires. It covers, apart from the Billionaires, politicians, bureaucrats, media, cricket and more.

Anyone who has followed developments in India closely may already be aware of most of the facts in the book. But even for them, the description of interplay between various sections of the power set will be useful. The analysis of how things work in India, how they got to this state, the challenges ahead, and the potential paths forward are all interesting.

The author pulls his punches, specially when criticising the politicians. This could be to maintain access for himself and the media organisations he works with. This may also just be the journalistic prudence at play—presenting facts not judgements.

The richest man in India

Chapter on Mukesh Ambani, Antilla and power of the rich

In India, unlike in the Wes, wealthy neighbourhoods tend to have lower voter turnouts while poor areas stream to the polls, in the hop that loyalty to some local politician or other might improve their lot.
The upper middle classes view their politicians as they view their tycoons: as operators of dubious machines fuelled by graft and patronage.


Hypothesis on the persistence of crony capitalism’ by Raghuram Rajan

India’s public services were threadbare, he argues. Social welfare programmes meant to help the poor worked badly. State schools and hospitals were typically dismal, while the state failed to provide basic services like running water and reliable power.
This is where the crooked but savvy politician fits in. While the poor do not have the money to “purchase” public services that are their right, they have a vote that the politician wants. In return the politician developed systems of patronage, helping constituents to find government jobs or receive welfare payments, or simply handing out cash.
And to get the money to do this, as well as to fund election campaigns, the politicians needed the kind of cash that only very wealthy business-people possesses.


The good times begin

Chapter on Vijay Mallya—rise and fall

‘Let the whole world hear it loud and clear. India is now wide awake.’

—Manmohan Singh delivering first liberalisation budget as finance minister in 1991


Rise of the Bollygarchs

Chapter on Gautam Adani, and on general conditions in India leading to accumulation of wealth and corruption

‘Too many businesses were accumulating wealth because of their ability to manage the government rather than manage innovation.’

—Jayant Sinha


Political risk analyst Ian Bremmer defines emerging economies as those in which ‘politics matters at least as much as economic fundamentals for market outcomes.’

Businesses in developing nations often struggle to operate in the face of laws and regulations that are neither transparent nor well enforced. Instead they learn to rely on connections and patronage to expand.


(Amartya Sen and Jean Dreze) have been sharply critical of India’s post-liberalisation record, which for all of its growth has slipped behind that of neighbours like Bangladesh on measures of human development, from child nutrition to the advancement of women.
The duo argues that this was mostly the fault of an under-funded and under-developed welfare state, which has in turn contributed to a growing imbalance between rich and poor. In his own way Sen also looked to the successful ‘tiger’ economies of east Asia, but mostly because of the way that they grew rich by investing heavily in basic health and education, which in turn helped to provide social support to poorer workers as they moved from farms to factories and onwards into the middle class. Modern India, by contrast, more often looked like an economy in Latin America, with a weak social safety net and yawning inequality.


India Modified

Chapter on rise of Modi

Rather than play down his modest heritage, however, Modi fashioned from it perhaps the defining image of his campaign: the place he took as a child helping his father to sell tea from their family’s wooden stall, next to Vadnagar railway station.
This image was a relatively recent invention. People in Ahmedabad who followed Modi’s career told me the tea story began featuring in his speeches only around 2012, when he was first positioning himself as a national political figure. Before then he almost never discussed his family background.
‘No one really knows the real Narendra Modi,’ the Times of India said of him in 2007, during his second term as chief minister. ‘He even dines alone.’
By 2014, however, Modi referred proudly and often to his humble beginnings: the lower cast birth; the boy who swam bravely in the crocodile-infested lake; the sacrifices he made leaving his family for a life in politics; and especially the story of the humble son of a chai-wallah who now yearned to lead a nation.


The rewards of India’s prosperity had grown unbalanced, with rules that favoured the super-wealthy and their friends in politics. There were contradictions in Modi’s promises to reverse this trend, not least the fact that he pledged to bring India’s Bollygarchs to heel in a campaign lavishly funded by their donations.

Just as America’s Republican party draws support from a mixture of evangelical Christians, small business owners and Wall Street financiers, so Modi used this anti-corruption message to build an unusual political coalition of his own, bringing together Hindu religious hardliners and middle-class moderates.


Yet as India tore down the vestiges of socialism it became rapidly more capitalist but barely, if at all, more liberal. Instead its citizen turned to a politician who offered the prospect of material prosperity, but also the comfort of a strong sense of Hindu identity and protection against external forces, be they the treat of radical Islamism or the equally unsettling forces of global economic disruption.

As American author Robert Kaplan once wrote: ‘The spirit of India has undergone an uneasy shift in this new era of rampant capitalism and of deadly ethnic and religious tensions, which arise partly as violent reactions against exactly the social homogenisation that globalisation engenders.’
Modi was part of a wider pattern, taking his place alongside a wave of conservative, nationalist leaders from Vladimir Putin in Russia, Shinzo Abe in Japan to Recep Tayyip Erdogan in Turkey, and ultimately, in America, Donald Trump.
I always say that to me secularism means “India first”,’ Modi said in 2012.


With neat streets and tidy houses, Juhapura itself was not a slum. Rather it was a place that provided sanctuary for Muslims of all backgrounds, from struggling refugees to middle-class professionals and prosperous business owners. In 2002, even Gujarat’s wealthiest Muslims were given a brutal reminder of the perils of living in Hindu neighbourhoods.
This isn’t a ghetto in the American sense, with only poor people. It is a ghetto like Jewish areas in nineteenth-century Europe, where all classes were forced to live,’ Zahir Janmohammad, an Indian-American author and human rights campaigner who lived in the area, told me.


The season of scams

Chapter on the lack of capacity and intent in Indian state apparatus, and the resulting corruption opportunities

In he 1980s, economist Robert Klitgaard defined corruption as a process involving ‘monopoly plus discretion minus accountability.’
Until Rai came along, India’s scandals followed this formula almost exactly.


Bribery had become so socially entrenched that Kaushik Basu, the government’s chief economic adviser, called in 2011 for it to be made legal. His idea caused a furore, although its logic was clear, namely that people were more likely to admit having made illegal payments if they faced no penalty, which in turn could help police identify those who had demanded money in the first place.


Behind these corruption issues lay the longer-term problem of the weakness of India’s state. The country’s rapidly growing economy placed new demands on its government, as it tried to keep pace with a more dynamic business environment. Yet the machinery of the state was often woefully equipped for this task.

‘We have this state heritage where everything is forbidden unless it is expressly permitted, which dates right back to Raj’—Manish Sabharwal, chairman of TeamLease

For decades India had defined its ‘reforms’ in economic terms, while doing little to fix basic issues like public procurement.
China managed to combine high growth and high corruption partly because its government machine was impressively efficient. By contras, India’s was intrusive in some areas and incompetent in others.
It suffered, in short, from what Sabharwal described as ‘bureaucratic cholesterol’, meaning an inefficient, corruption-riddled system that was clogged up from the inside.


Harvard academic Lant Pritchertt once described the Indian state as ‘flailing’, rather than failing. By this he meant that the state was competent in parts, mostly at its upper levels, but overwhelmed the further down you went.
‘In police, tax collection, education, health, power, water supply—in nearly every routine service—there is rampant absenteeism, indifference, incompetence, and corruption,’ he wrote.


An ingenious method of tapping earnings from lower-level corruption: pay a % of job’s bribe-earnings potential to get the job, then keep all the resulting earnings.

British political economist Robert Wade wrote a celebrated paper in 1982 revealing the intricate system of payments that controlled the appointment of irrigation engineers in southern India. These employees, he discovered, could raise hefty sums in bribes, for instance by directing water to one town rather than another.
But instead of passing a cut of each bribe upwards to more senior bureaucrats and politicians, Wade uncovered a simpler and more ingenious system, in which each engineer would pay an unofficial fee to take their job in the first place, commensurate to the value of the cash that could be extracted from it. Having secured the post, the engineer could then earn nearly three times as much in bribes: ‘a most pleasing profit’, as Wade put it.

Money power politics

On politics and money in Uttar Pradesh

Modern academic models suggest that democracies rarely succeed in poor countries. In one study, the Polish-American political scientist Adam Przeworski found that countries below a certain level of GDP—$6,055 per head, to be precise—almost never manage to sustain democratic government.
At the time of its independence India was nowhere close. It was also deeply heirarchical, almost entirely rural, and with four-fifths of its population unable to read. Textbook models strongly suggested it would slide quickly into autocracy, as happened in Pakistan, its post-Partition neighbour.

Most wealthy countries are democratic, and most democratic countries—India is the most dramatic exception—are wealthy,’ as political scientist Samuel Huntington once argued.


Yet India’s democracy also proved successful, binding together a subcontinent that was far more linguistically and ethnically diverse than China, and which could easily have ended up divided into as many nations as Europe.

Cronyism goes South

On politics and money in South India, mainly Tamil Nadu (Jayalalithaa) and Andhra Pradesh

In the south, you can say that politicians learned to steal, but to do it while expanding the cake at the same time,’ as Devesh Kapur, a professor of political science at the University of Pennsylvania, once put it to me. ‘In north India they just went about taking as much of the cake for themselves as they could, and soon there wasn’t any cake left for anyone else.


Manish Sabharwal, the head of recruitment group TeamLease, once drew a distinction between their various records, contrasting their ‘roving bandit’ and ‘stationary thief’ models of political power.
The roving bandit is a politician like Kublai Khan in ancient China, who says “Give me everything you’ve got”.
The stationary thief says “Give me ten percent of the value of this project, and now tell me how you are going to grow it”.


‘They operate what you might call a “portfolio selection approach”, in which they want to make some money in some areas, but they also want to deliver certain services in others,’ one of her most senior civil servants said. Money could be taken from government contracts or extracted from investment projects, or misdirected from state spending programmes. Choosing between these options involved weighing up the risk of being caught. But it also meant keeping in mind the need to deliver growth, or at least to build the kind of high-profile infrastructure and public spending projects that voters seemed to like.


‘They have found out that corruption doesn’t matter,’ the civil servant told me. TN’s electorate did not seem to mind if their leaders were on the take, so long as they were not looting extravagantly and they delivered progress in other ways.
Business leaders were similarly phlegmatic, viewing this kind of corruption as akin to a tax: a cost of doing business, but a predicable and manageable one.

‘They prefer Jayalalithaa because her AIADMK is more efficient at delivering,’ one American government official wrote in a diplomatic cable, leaked by WikiLeaks.

House of Debt

On the subservient and NPA-loaded public-sector banks

…as Rajan explained, graft was not the real problem facing India’s financial system. Instead, it was the subtler but more significant power imbalance between creditors and the tycoons to whom they lent. It was not just that the banks were run badly. Rather, it was that they lacked the tools that financial institutions in most other countries deployed to keep their borrowers in line.
One problem was information, given that lenders were unable or unwilling to ddig into the overall condition of the conglomerates themselves, or to find out whether their owners were shifting debts around between companies.
India also had no functioning bankruptcy rules, which made it all but impossible to kick out owners at a failing company and sell off its assets. Capital was expensive in India largely because it was so hard to get it back if things went wrong.


Under the old socialist system companies were unable to enter new markets, either because private players were banned or because complex licences protected incumbents. Liberalisation changed that. But now in a host of sectors—power, steel, construction, aviation and even banking itself—capital was stuck inside struggling enterprises.
India had moved from ‘socialism with restricted entry to capitalism without any hope of exit’, as Arvind Subramanian (Government’s chief economic adviser) put it.
Creative destruction was not being allowed to work.

The anxious tycoons

On Naveen Jindal, Lala companies, and effect of the season of scams

Whatever the truth of those allegations (influence-peddling and moving ahead illegally with projects without proper permissions), they also embodied a different dilemma, and one faced by almost anyone trying to build big industrial projects in India, namely that if you followed every rule and waited for each official green light, you could reasonably be certain that nothing would ever be built.

(Above is one of the longest single sentences I’ve read in a while. I think I write long sentences, and need to shorten them. This is an extreme example in the other direction.)


More than a game

On cricketers (Sreesanth), IPL (Lalit Modi), and BCCI (Narayanaswami Srinivasan)

A self-consciously brash reboot, the two-month tournament rapidly transformed the image of cricket: from a game played by men in white over five long days, often ending in a draw, to a pulsating three-hour jamboree, where the players dressed in brightly coloured kits and draws were impossible.
Where matches were once watched politely by elderly men in half-empty grounds, now India’s cricket stadiums were filled with delirium for eight weeks each spring.


…underneath the power structures of old remained largely unchanged, inherited from an earlier era when the game was run by ‘men of middling talent and limited ambition, serving usually in honorary capacities and concerned chiefly to insure cricket against change,’ as Gideon Haigh once put it.


‘No medici controlled Florence as comprehensively as the BCCI controlled cricket,’ as Indian commentator Mukul Kesavan once put it. ‘During his [Srinivasan’s] reign, most living things in cricket’s jungle became the Board’s creatures, bound by contract, muted by money and sworn to servility.’


Bureaucratic cost control + lack of understanding incentives

Unimaginable as it might now seem, as late as the 1960s cricketers in India were paid just Rs 250 to play a five-day test match—a per diem rate of Rs. 50. If the team performed well, and won in four days, they were docked a day’s wages.

The nation wants to know

On Arnab Goswami and the post-truth news media

In Goswami’s style, critics saw an Indian variant of what became known later as ‘post-truth’ politics, in which the nightly clash of guests deepened social divisions but added little to public understanding.


More telling is what newspaper editor T. N. Ninan dubbed the rise of ‘vigilante TV’, with Goswami as its leader. ‘Impartiality is for the clubby Prannoy Roys of the world. TV news Rottweilers in attack mode have proved for many to be as riveting as any soap opera. Breaking news is now about smashing reputations.


We are not in the newspaper business. If ninety per cent of your revenue comes from advertising, you’re in advertising business.’ — Vineet Jain, owner of Times Now and the Times of India, defending a relaxed attitude to editorial standards.

The tragedies of Modi

On Modi and Amit Shah in power

A progressive era

Closing mini-chapter

Inequality and the mega-rich

‘There is something a little deceptive about focusing on the very rich. Having lots of rich people is not always a bit problem so long as they get no special favours and pay fair taxes.’ — Amartya Sen


Those Latin American economies with the widest social divides have proved less economically stable and more likely to get stuck in the ‘middle-income trap’, in which poorer nations achieve moderate prosperity but fail to become rich.
The more successful countries of east Asia, buy contrast, grew prosperous while managing to stay broadly egalitarian, partly by building social safety nets


Sen is right to push basic education, health and pension provision for those at the bottom of the social ladder…
At the top, it means greater focus on raising tax, especially from the wealthy.

This does not mean attacking the rich, but it does mean ending the ridiculous situation in which only one per cent of Indians pay any income tax at all, and barely 5,000 people do so on earnings above Rs 10 million ($155,000).

Corruption & growth

‘For any society to lift itself out of absolute poverty it needs to build three critical state institutions: taxation, law and security,’ according to Oxford economist Paul Collier.
All three in India—the revenue service, the lower levels of the judiciary and the police—still suffer endemic graft. Perhaps most importantly, the country’s under-the-table political funding system remains largely untouched.


‘The optimal level of corruption will not, in practice, be zero,’ as Robert Klitgaard wrote in Controlling Corruption.
By this he means that the cost of wiping out profiteering would require unacceptable collateral damage.

‘Fight corruption too little and destroy the country. Fight it too much and destroy the party,’ as one Chinese communist party leader is supposed to have said.

Instead, there is likely to be a continuing trade-off, in which India will struggle to deliver the two things Modi has promised above all: very rapid growth and very little graft.

The balance of growth and corruption then lies at the heart of the struggles of India’s industrial economy.

A better approach is to push institutional anti-graft reforms, such as the earlier decision to auction off rights to natural resources, which can help keep corruption under control while allowing growth slowly to return.
This in turn should form part of a broader set of changes that are described in India as a transition from ‘deals-based’ to a ‘rules-based’ system of capitalism, meaning one whose rules allow little political and bureaucratic discretion over public resources.


‘If one was a dictator, you would work on improving public services to break the nexus [between businesses and politicians] and reduce the level of corruption. And you would also work directly on trying to reduce the concentration of economic power by increasing competition’—Raghuram Rajan

State capacity

‘The most important political distinction among countries concerns not their form of government, but their degree of government.‘—Samuel Huntington


‘Indians are living behind their means.
There was an old poverty where you did not have enough to eat. The new poverty is getting some development but not all, because municipal administration is weak’—Shekhar Gupta


In the aftermath of liberalisation, India has suffered from an enduring delusion that it might move rapidly from poverty to advanced-economy status, often by using technology to ‘leapfrog’ towards a modern form of competitive capitalism.
These hopes are understandable, but often they are also a distraction from the tedious business of building the kind of government institutions that make economic advancement most likely.